Chinese semiconductor industry

Fourth quarter maybe much lower due to sanction, need to bite the bullet and sell chips to Huawei, both of them need each other to survive.

from cnTechPost

SMIC posts Q3 revenue of $1.08 billion, beating estimates
2020-11-11 18:56:51 GMT+8 | cnTechPost
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SMIC's recorded third-quarter revenue of $1.08 billion, topping analysts' estimates of $994.8 million, according to the company statement today on the Hong Kong Stock Exchange.
Previous analysts' estimates for the leading Chinese contract chip maker's third-quarter revenue ranged from $957 million to $1.1 billion.

SMIC's third-quarter net profit was $256.4 million.
SMIC's gross margin for the third quarter was 24.2%, beating analysts' estimates of 22.0%.
SMIC's third-quarter capital expenditures were $2.28 billion.
SMIC said it expects fourth-quarter revenue to be down 10-12 percent from the previous quarter, and full-year revenue growth estimates were revised up to 24-26 percent.

nastya1 said:

I heard state of art for latest DUV equipment from ASML cost as much as $40+million each.
If Chinese subsidied the 1 time engineering cost, does the material cost $4million? I don't know .. It's tricky.
Half of the yield is terrible, that would be a total nonstory then.

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Doubtful. The cost it takes to build these things is not trivial. It’s not just about assembling a bunch of ready made parts. There is no one off engineering cost and then unskilled assembly during production. This equipment is really complex. You are doing constant engineering just to build these things.

Anyways, ultimately what I’m saying is there’s no point projecting hypothetical bravado here. You can’t out-clever the situation with cheap equipment arguments. If SMIC is not price performant using comparable equipment to other fabs that means their production process needs improvement, and cheaper equipment that may itself be less performant won’t make them more competitive. Cheapness isn’t the answer to production efficiency. Performance to cost ratios are. Foreign equipment may be more expensive but if their performance to cost ratios are better then they are still going to be more cost efficient than the cheaper equipment.

nastya1 said:

what i saying is improving the yield is not enough, you got to scale up with more equipments to compete regardless.
lets say your yield is 100% and you have 1 main machine running in the whole factory, that machine would become the total bottleneck while all other equipments running in the factory
while your competitor have 30 main machine running at 100%.
who's going to win?

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Each extra piece of equipment is also more operational and capital costs. Adding and then running more equipment doesn’t make your cost ratios better.

Wangxi said:

Good news

https://twitter.com/i/web/status/1326165077767065601

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When Trump or one of his lieutenants make a comeback in four years they are gonna regret this .

To put it in another way, it is vastly better for your machines to cost 10 times as much to build than for them to cost 10 times as much to supply and maintain, all else being equal.

The former is a barrier to entry. The latter is unsustainable.

Arcgem said:

To put it in another way, it is vastly better for your machines to cost 10 times as much to build than for them to cost 10 times as much to supply and maintain, all else being equal.

The former is a barrier to entry. The latter is unsustainable.

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Speaking purely in terms of purchase prices also obfuscates the issue. The question is what performance or output are you getting out of what you buy, not what the cost of the equipment is. If Chinese equipment had lower absolute output but better output to cost ratios they would be dominating the market already.

Will Huawei push thru the sale of HONOR brand after Qualcomm got permission to sell its chip? Main loser from this deal is MEDIA TEK,


from cnTechPost

Huawei's woes expected to ease as Qualcomm reportedly gets permission to supply chips
2020-11-11 19:43:05 GMT+8 | cnTechPost
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The crucial chip conundrum for Huawei is set to see the light of day.
Qualcomm has received permission to supply Huawei, which means the chip woes facing Huawei's P, Mate high-end products will be eased, 36kr.com said, citing a source close to Huawei.

On November 5, Qualcomm confirmed in its fourth-quarter earnings report that it had received a one-time payment of $1.8 billion from Huawei to cover patent fees. Qualcomm said at the time that it had formally submitted an application for a license to supply Huawei.
Previously, Huawei rotating chairman Guo Ping revealed in a public speech that Huawei was willing to use Qualcomm chips if the US allowed it.

On May 15, 2019, the US Department of Commerce said it would place Huawei and 70 affiliates on an "entity list" that would prevent Huawei from purchasing components from US companies without US government approval.
On August 17 this year, this sanction escalated with the US Department of Commerce issuing new rules to restrict Huawei's access to other chipmakers' products.

After the ban was implemented on September 15, Huawei smartphones and other smart terminal products face the problem of no chip supplies.
To partially solve this problem, Huawei reportedly planed to sell the Honor brand.

A number of media said yesterday that Huawei plans to sell the entire Honor mobile phone business as a package, in a deal priced at about 100 billion yuan based on Honor's 6 billion yuan profit last year and 16 times PE.
The acquirers include Digital China, three state-owned institutions, and a minority shareholder camp made up of companies such as TCL.
"The shares are relatively evenly held in this deal, with the highest stake in Digital China," a source cited by 36kr said, adding "Honor management also holds the shares."
Along with the sale of Honor's stake, Honor's mobile phone team is set to undergo a major staffing restructuring. Sources said Honor's 8,000 employees will be moved out of Huawei's Sakata headquarters to its office space in Meilin, Shenzhen.

latenlazy said:

Speaking purely in terms of purchase prices also obfuscates the issue. The question is what performance or output are you getting out of what you buy, not what the cost of the equipment is. If Chinese equipment had lower absolute output but better output to cost ratios they would be dominating the market already.

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Hence the "all else being equal". Ten machines each with 1/10 the yield but 1/10 the supply or operating cost is basically the same as one standard machine.

latenlazy said:

Speaking purely in terms of purchase prices also obfuscates the issue. The question is what performance or output are you getting out of what you buy, not what the cost of the equipment is. If Chinese equipment had lower absolute output but better output to cost ratios they would be dominating the market already.

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Most western companies would still use taiwan foundry rather than China foundry due to geopolitical issues.

nastya1 said:

Most western companies would still use taiwan foundry rather than China foundry due to geopolitical issues.

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If companies cared about the geopolitics they wouldn’t be manufacturing in China to begin with.